Does being in the markets for many years or studying its history mean you know everything that is there to see in investing?
Big no. Life and the market will always surprise you.
So, let’s discuss 8 important lessons all experienced investors should know that may help you become a good investor and reduce your stress. Even beginners should learn these lessons.
Estimated read time: 3 minutes and 06 seconds
Buckle up, here we go!
Lesson #1: Market might yet surprise you
Just being in the market for many years or studying its history does not mean you have known and seen everything that is there to see in investing.
Every now and then, the market will continue to surprise you. Be prepared to answer the hard questions.
As John McAfee has famously said, “Making money is easy. It is. The difficult thing in life is not making it, it’s keeping it.”
Lesson #2: Your luck may run out
Every time someone gets a prediction right, they call themselves experts. They think they can do it again but fail miserably. Often we forget the role luck plays in our life. Only with time and experience, we learn luck’s role.
Even legendary investors have accepted that they can’t predict the future.
So, stop predicting and seeking predictions. Just keep preparing for the rough times coming your way.
Lesson #3: You are biased and irrational
The best investors have not been able to master their emotions. So, if you think you have hope, think again.
First, we should accept the fact that we are irrational beings with a lot of biases. And then, at least we can try to minimise our mistakes, not eliminate them.
Lesson #4: Trust the process
We are emotional fools. We get overwhelmed very easily.
In investing, one way to avoid being an emotional fool and being overwhelmed is to follow a process that suits you. Prepare a checklist that will help you automate most of your decisions.
If you need an example, you can check out the checklist we prepared for personal finance beginners.
Find a process and checklist with which you are most comfortable. While you need to trust the process, don’t forget to update it if you found some mistakes.
Lesson #5: Keep it simple
Experience does not guarantee that you understand the complexity of the market and its participants. Even researchers and professors who spend full-time to understand the market haven’t succeeded yet.
Also, understanding the market differs from controlling it to earn profit. You can’t do that either.
So, the best chance you got against the complexity of markets is the simplicity with which you should invest.
Keep it simple goes for beginners and advanced investors.
Lesson #6: Stop being up-to-date
I have tried being up-to-date and suffered a lot. In this modern world, everything changes in an instant, and you can’t keep up with it.
Also, the real question is what will you achieve by being up-to-date? Is the return worth it?
Most experienced and knowledgeable people have said it’s not worth it.
So, stop consuming media, most of it is noise. Since you often do not know what isn’t, you are better off completely avoiding it.
Life is happier avoiding media, and investment decisions are saner.
Lesson #7: Keep changing
Legendary investor Howard Marks says, “There are old investors, and there are bold investors, but there are no old bold investors.”
As you age, your priorities and capabilities change. Be aware of them and keep updating your investment style.
Remember this. In great likelihood, if you keep acting bold, you may never reach your old. The mind and body have their limits. Know that.
Lesson #8: Live life
Eliminating useless media and following a checklist is just the start.
You have to eliminate a lot of useless stuff, useless stocks, useless advice, and useless practices from your life.
Spend less and less time in the stock market and more time outside of it. Learn art. Read old books. Learn to write. Start a diary.
Do anything instead of keeping a constant focus on your stocks, portfolio, and net worth.
Focus on what’s enduring. Leave the temporary out.
Safal Niveshak’s post inspired these lessons. Check out the whole post here.
We also wrote about 8 important lessons all new investors should know, read here.
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